The latest: When does a constructively dismissed employee have to stay with their employer?

In 2008, the Supreme Court of Canada issued Evans v Teamsters Local Union No. 31, [2008] 1 S.C.R. 661, one of the leading decisions on constructive dismissal in Canada. In that case, the Court held that a constructively dismissed employee must mitigate their damages by continuing to work with the dismissing employer if a reasonable person would accept this mitigation opportunity. In determining whether it is reasonable to mitigate by working for the dismissing employer, the Court stated that one should consider the following factors:

The history and nature of the employment;

Whether the offer of re-employment was made while the employee was still working for the employer or only after he or she had already left;

Whether the salary is the same;

Whether the working conditions are substantially different or demeaning; and

Whether the working relationships are acrimonious.

The Supreme Court of Canada also indicated that it is important that the non-tangible elements of the situation, including work atmosphere, stigma and loss of dignity be included in the evaluation.

Since Evans v Teamsters was issued, lower courts have struggled with the question of whether a constructively dismissed employee should be required to mitigate by continuing to work in the changed position during the reasonable notice period. The Ontario Court of Appeal recently provided further guidance on this issue in Farwell v Citair Inc. (General Coach Canada), 2014 ONCA 177.

In Farwell v Citair, the trial judge held that Farwell had been constructively dismissed and that he had not failed to mitigate his damages by refusing to remain in his changed position during the notice period. The employer appealed the decision to the Ontario Court of Appeal.

The Court dismissed the appeal and found in favour of the employee, Mr. Farwell. The Court stated that while there may have been an obligation on Farwell to mitigate by working through the notice period, this was dependent on the employer clearly offering Farwell the opportunity to work through the notice period. The Court stated that this offer must be made by the employer after the employee refuses to accept the changes to the terms of his employment and takes the position that the changes constitute constructive dismissal. The Court found no evidence that the employer had extended an offer to Farwell to work in the changed position as mitigation during the notice period after he alleged constructive dismissal. The Court stated that this was an “insurmountable obstacle” for the employer and that, as a result, the employer could not establish that Farwell failed to mitigate his damages. As a result, the Court dismissed the appeal.

This case indicates that if an employer wishes to take the position that an employee should have mitigated their damages by working through the notice period, they have to meet more than just the factors enunciated in Evans v Teamsters. The Court will also look for evidence that after the employee refused the changes to the terms of their employment and took the position that they were constructively dismissed, the employer offered the employee the chance to mitigate by working through the notice period.

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Alison Bird is a lawyer practicing in Halifax with the Atlantic regional law firm, Cox & Palmer. Alison is growing her practice in the areas of labour & employment law and litigation. Alison is a frequent presenter on employment law topics and recently presented on the challenges being faced by employers dealing with changing demographics in the workplace. Read more